A Company That Manufactures Baseball Gloves Is Contemplating Whether to Increase

question 9

Multiple Choice

A company that manufactures baseball gloves is contemplating whether to increase its advertising budget by $3 million for next year.If the expanded advertising campaign is successful,the company expects sales to increase by $4.8 million next year.If the advertising campaign fails,the company expects sales to increase by only $900,000 next year.If the advertising budget is not increased,the company expects sales to increase by $450,000.Identify the possible outcomes in this decision-making problem.

• A) Two choices: (1)increase the budget and (2)do not increase the budget.
• B) Four consequences resulting from the Increase/Do Not Increase and Successful/Not Successful combinations.
• C) Two choices: (1)campaign is successful and (2)campaign is not successful.
• D) The increase in sales dollars next year.

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Definitions:

Quantity Supplied

Refers to the amount of a good or service that producers are willing and able to sell at a given price during a specific period.

Quantity Demanded

The amount of a good that buyers are willing and able to purchase at a specific price.

Quantity Demanded

The overall volume of a commodity or service that consumers are ready and able to buy at a certain price within a market.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price over a specific period of time.